The first key decision you need to make for each of your products is whether you will employ the services of an advertising agency to assist you with your media selection.
Four Agencies
Internal Plan
The Internal Plan means trusting your own media selection ability and going at it alone, which often obtains far greater returns.
The default plan for each product is average at best. Approximately 30% of you promotion budget is being wasted on poor media selection. By carefully reading and analyzing the marketing plan and market overview/research for your product’s target segment, you should be able to greatly improve the effectiveness of your promotion budget.
TV Magic
TV Magic is a media-buying agency that specializes in producing TV advertisements and bulk purchasing TV advertising time.
TV Magic will suggest a TV advertising media plan that will be significantly better than following the default plan. They are less skilled at other media production/selection, but their suggested plans will be noticeably better than the default plan.
Print Works
Print Works is a media buying agency that specializes in producing print advertisements and bulk purchasing print advertising space.
Print Works will suggest a Newspaper/Magazine advertising media plan that will be significantly better than following the default plan. They are less skilled at other media production/selection, but their suggested plans will still be noticeably better than the default plan.
Radio Can
Radio Can is a media-buying agency that specializes in producing radio advertisements and bulk purchasing radio-advertising airtime.
Radio Can will suggest a radio advertising media plan that will be at least significantly better than following the fault plan. They are less skilled at other media production/selection, but their suggested plans will still be noticeably better than the default plan.
Need extra help?
You can receive an immediate answer to a number of commonly asked questions through the Smartsims Support Center
Alternatively, you can contact our Support Team here.
There are three ways on how you can test your decisions in MikesBikes Introduction to Business Simulation.
1. Live Forecast
The figures on the Live Forecast update in real-time as you click “Apply” on any decision screen. This enables you to easily see the impact of individual decision changes on overall performance.
The figures can then be clicked to bring up the relevant forecast report in full. Previous figures remain in small font below.
The new Live Forecast feature will help you make more informed decisions and provide an immediate warning if you have made poor decisions.
2. Forecast Results Reports
This menu features reports which give you an indication of your performance – assuming you meet your forecasts.
There are a range of Pro Forma reports available for you to view:
Forecast Results Report Overview
Pro Forma Income Statement
Pro Forma Product Gross Margin Report
Pro Forma Cost of Goods Manufactured Report
Pro Forma Cashflow Report
3. Offline Mode
This feature in the Multi-Player allows you to try out different decision options and strategies before you commit yourself.
In Offline Mode, your competitors use only their default decisions. So don’t read too
much into the results.
To start Offline Mode, click the “Offline” button next to the Multi-Player launch button.
In Offline Mode, your competitors use only their default decisions. So don’t read too much into the results. For instance, in Offline Mode you might launch new products into empty markets and do very well due to lack of competition. But if you use those same decisions in the Multi-Player, you could do poorly if the other firms choose to launch new products at the same time. So always think about what might happen if your competitors were to do something differently.
Important: After using Offline Mode, your team’s agreed decisions need to be re-entered in the Multi-Player.
Watch our tutorial video here:
Note that this feature might be disabled in your course.
Need extra help?
You can receive an immediate answer to a number of commonly asked questions through our Support Center.
The decision screens which enable students to modify an existing product and launching new products now feature additional information to help students make more informed decisions.
Launching a new product
Previously students would need to navigate to the Market Information and Market Summary Report for this key information, but we have now placed it directly within the screen.
Modifying an existing product
Students will now see a short description of each option with the corresponding cost and benefit.
Missed our previous Product Update articles? You can check these out here:
More than a mathematical analysis of risks and returns determines the value of a share. It is also affected by how much the investment community knows and understands about the company concerned, and their perceptions of the quality of the firm’s management.
Hence to ensure that their shares are fairly valued, firms need to make every effort to ensure that investors and their advisors have recent frequent clear information about the firm’s situation and plans. The larger and more complex the firm, the more effort is required.
Investor Relations (Investor PR) Index
The Investor Relations (also known as Investor PR) index essentially acts as a multiplier on your company’s share price. So for a very simple example, if your Investor PR index is 1.1, then your Share price will be 10% higher than if your Investor PR index is 1.0 (assuming no other changes). In practice, by spending on Investor PR you will reduce your profit, which will be a drag on your share price, so the effect isn’t quite as simple as that.
In general, the larger your company, the more you need to spend to get a higher PR index. The maximum PR index possible is around 1.2, and you have to spend more and more to raise your index the closer you get to that limit.
How much should we invest in Investor PR?
Your best guide to how much to spend on Investor PR is to look at your current Investor PR index and spend, then decide how much more you are willing to spend on it to try to boost it. Keep in mind that if you spend too much on Investor Relations you may depress your Share Price by reducing your profit and earnings per share. Also decide whether or not there is another better use for the money spent on Investor Relations such as on Product Development.
The following are Smartsims product updates available from August 2018. Where product names are noted in the heading, that update only applies to these products.
This live resource enables users to find instant answers to their questions, as well as browse a wide range of help topics. The current articles available range from getting started, help with logging in and registration, through to guiding students on how to make decisions.
These figures on the Live Forecast update in real-time as students click “Apply” on any decision screen. This enables students to easily see the impact of individual decision changes on overall performance.
The figures can then be clicked to bring up the relevant forecast report in full. Previous figures remain in small font below.
The new Live Forecast feature will help students make more informed decisions and provide an immediate warning if they have made poor decisions.
Performance Star Ratings (MikesBikes Introduction & MikesBikes Advanced)
The bottom-left of the simulation interface now features a new gold star rating system:
The star rating students receive is based on their results from the previous year. A jump in Shareholder Value will result in an additional gold star achieved and vice-versa.
We hope this will further motivate students to improve their performance each year of the simulation.
Editing Product Names (All MikesBikes & Music2Go)
Previously, the name for the initial product has been computer generated (Adv1, Adv2, etc). Now through the Product screen students can edit their product’s name in the first year of the simulation:
Additionally, when students launch a new product, they can now edit the new product’s name at any time prior to the next rollover.
This live resource enables our simulation users to receive instant answers to their questions, as well as browse a wide range of help topics to guide them through their learning journey.
The Smartsims Support Center works on any device:
Browse decision areas such as Marketing, Operations, Finance; or specific decision periods:
And users can share their feedback on the help articles, enabling us to continue to improve content available through the knowledge-base:
Henry Ford is known for his innovative assembly line and American-made cars . Like many, he wasn’t an overnight success. His early businesses failed and left him broke five times before he founded the now successful Ford Motor Company. As they say,
Remember that life’s greatest lessons are usually learned at the worst times and from the worst mistakes.
Over the years, we have noticed the three common mistakes that students make in MikesBikes Intro and we want you to learn from these and how you can resolve them.
Three of the most common mistakes in MikesBikes Intro are:
Misunderstanding the Importance of Pricing Products Correctly
Inaccurate Sales Forecasts
Ineffective Spending in Operations
Mistake#1: Misunderstanding the Importance of Pricing Products Correctly
As Katherine Paine said, “The moment you make a mistake in pricing, you’re eating into your reputation or your profits.”
Price is usually a key determinant of demand and is the most critical component to maximizing your revenue. Therefore, carefully thinking about your Pricing strategy is important as this would have an impact on the demand for your products.
With a poor pricing strategy, you will be missing out on profits in every transaction that you make. View the “Market Summary Report”, in comparison to your competitors does your product have low Awareness, low Quality, low Distribution, or low Delivery (or all of the above)? If so you should price your product at the lower end of the market, if not and demand for your product is still average to high, then you can price your products at the higher end of the market. Keep in mind that extreme prices, high or low, will have a negative effect on Gross Margins.
There are several pricing methods, the most common of which are:
Mark-up: Fixed margin on costs
Target Return: Return/margin required by the company
Perceived Value: What the consumer is willing to pay
Going Rate: What is being charged in the market
These methods need to be in line with the overall marketing strategy. In addition, the retail price should be set by having regard for the price sensitivity of consumers and the prices of competitive products. This can be found in the Market Information Report (under the Key Reports menu).
Mistake# 2: Inaccurately Forecasting Sales
We have noticed two mistakes that students make in terms of forecasting sales:
Excessive Closing Inventory
Issues with Lost Sales due to lack of stock
Both of these scenarios are caused by inaccurately forecasting your firm’s sales for the year ahead. Ideally a firm would want to minimize this by correctly forecasting sales and adjusting your production based on this forecast (while also taking into account existing inventory levels).
There is a very helpful video available that demonstrates how to Forecast Sales within MikesBikes Introduction for new and existing products. Watch this here to learn how to Forecast your Sales accurately:
Mistake# 3: Ineffective Spending in Operations
Students often overspend or underspend in Operations and both have negative implications in their factory, its efficiency and the quality of their products.
There are three Operations decisions that you make in MikesBikes: Capacity, Efficiency and Quality.
Spending in these areas must be linked to your products and consumer preferences, some products require low Quality or high Delivery Time, whereas others revolve around Pricing and Advertising.
Capacity
Your Factory capacity is measured in Standard Capacity Units (SCU). The theoretical
capacity of a factory (in SCU) is calculated from the plant (machine) capacity and
the number and effectiveness of the workers.
For example, the standard Mountain bike requires 0.5 SCU to produce one
bike. If 500 SCU were available for production then the maximum output of
this design would be 500 SCU/0.5 SCU per unit = 1000 bikes (assuming zero idle
time and wastage).
Keep in mind that too much capacity relative to production/sales demand will result
in greater idle time (an inefficient use of resources causing higher average
manufacturing costs per bike). Also note that the maximum capacity you are able
to buy is set at the maximum amount of available cash you have for this year
before spending anything on any of your other budgets (decisions).
Capacity decisions should be made to accommodate your currently entered sales
forecasts and production decisions.
Efficiency
The Efficiency decision is used to enter the amount to be spent on reducing
wastage during production. Wastage relates to time spent on activities such as
setting up and maintenance of machines. In turn these activities act as a constraint
on production by absorbing a proportion (%) of the factory’s available capacity.
Note that increasing the size of your factory involves an increased Efficiency budget
to maintain your existing Efficiency level.
Quality
Quality refers to the satisfaction experienced by customers from a product and is an
important determinant of customer demand. It is measured in MikesBikes in terms
of the Quality Index which can be tracked on the Market Summary report.
Increasing the size of your factory involves an increased quality budget to maintain
your existing quality level. Before heavily investing in quality, consider your product
strategy as some segments are heavily sensitive to quality while others are not (if
you are planning to be a discount specialist then a large quality budget may be an
unnecessary expense, while if you are focusing on high end products they must be
produced to a high quality).
Conclusion
Every situation is unique within the simulation and these are only recommendations based on common mistakes we have found. As such there are no generalizations but this article will provide you with the tools to diagnose your unique situation and correct any problems you may be facing.
If you have any questions or would like to discuss anything further from what has been mentioned, please feel free to get in touch with us by clicking here.
We’re now halfway through the year and exciting developments are coming your way!
Improved Tablet and Mobile Experience
We understand that students have busy lives and are not always near their computer. So we have made it easier for them to check their results and update their decisions from their tablets and mobiles.
They can access all the same decisions and reports as they can on their desktop browser. However, we have adjusted the tablet/mobile screens to show the most relevant content, the reports and scrolling are better suited to smaller devices, and a ‘Hamburger’ style menu makes it easy to navigate.
Key Reports within Decision Screens
When students are making decisions, they often need to review one or more reports which means they often have to leave the decision screen. So we have added a commonly-used reports tab to each of the decision screens.
Selecting a report from the “Reports” tab will display the report as a pop-up over the top of the decision screen. This way students can quickly review key information and make an informed decision without having to leave the decision screen.
New Historical Reports Menu (MikesBikes Only)
We often receive emails from students requesting access to previous years’ reports. To make this accessible for students, we have now made historical reports available for them to access. This is available to them under the All Reports menu.
Accessibility and Improved Compatibility with Screen Readers
A key requirement for many institutions is accessibility for students with disabilities. Our simulations work with JAWS and NVDA, two of the most common screen readers, to help vision impaired students navigate their way around. We also provide additional context information for the screen readers in the input fields.
For instance, when you enter the Retail Price input field, the screen reader would announce: “Retail Price. Decision last year was $1600. Minimum Price is $1000. Maximum price is $3000.”
Similarly when you enter the Production input field you would hear: “Production Units. Decision last year was 15,000 units. Maximum production is 18,700 units”
This is of great benefit to vision impaired students as they do not have to hunt around for the information they need to make their decisions.
Updated Report Names
Updated report names for the following reports in MikesBikes Introduction, MikesBikes Advanced and Music2Go Marketing:
The Product Summary – Sales, Margin, Production has been shortened to Product Summary.
The Market Summary (All Product Details) has been shortened to Market Summary.
MikesBikes Advanced only: Financial Results for All Firms is now called the Industry Benchmark Report.
Our MikesBikes users will know the little dog which has featured in the simulation over the years. It is with sadness we have retired “Cliks” and “Einstein” the dog. This older style feature simply does not gel with our current updated simulation interface, nor the upcoming new interface under development.
If you are using MikesBikes Advanced your course will most likely feature a Final Double Rollover.
What is a Double Rollover?
A double rollover means that the simulation will rollover twice simultaneously. A Final Double Rollover ensures your final decisions leave their company in a healthy position for long-term success.
How should I plan for the Double Rollover?
You only need to enter your decisions once before the Final Double Rollover. All decisions will then be processed for the first rollover. For the second rollover most of your decisions will simply repeat, except for the following decisions which will not carry over:
Hire/Fire Workers
Buy/Sell Plant
Raise/Repurchase Equity
Raise/Repay Long-Term Debt
Product Development Decisions
Takeover and Owned Company Decisions (if applicable)
